Friday, August 08, 2014

By Our Representative
Following India’s sharp differences over the World Trade Organisation’s plea to sign an international trade deal, found reflected in US secretary of state John Kerry telling Prime Minister Narendra Modi that India’s stance has sent “wrong signal”, Modi has found a new friend – Australia. Aussie news portal http://www.southasiatimes.com.au/ has reported that Modi is will be on an official visit of Australia on November 15-16. He will be attending the G-20 summit, which is to take place in Brisbane. It adds, “Modi will be the first Indian Prime Minister to visit Australia, after Rajiv Gandhi came here in 1986, i.e. 28 years ago”. Modi last visited Australia as Gujarat chief minister in December 2004 to campaign for the Vibrant Gujarat investment summit of January 2005.The portal underlines, the visit would come in the backdrop of the Queensland provincial government’s recent controversial environmental clearance to Adani’s Carmichael Coal Mine and Rail Project, one of the largest in Australia. “Adani is considered close to Prime Minister Modi”, the portal says, adding, “Adani has received flak for his coal project from environmental and financial experts for danger to the world heritage Great Barrier Reef.” Greenpeace has warned the Adani group it should not think it is going to be “end of the story”.
The portal quotes reports, quoting expert economic consultants, that Adani project is “not unviable”. According to the portal, it is “estimated to cost A$16.5 billion covering Greenfield construction of the mine, the railway and the coal export terminal, plus the associated water, road, airport, power and water infrastructure”. While the portal believes that the issue of Australia exporting uranium to India, agreed upon the previous Labour government, might be discussed, Modi would press on importance of the Adani project.
The recent Adani agreement with South Korean major Posco for the coal mining project is being closely watched by keen watchers, known to have been studying the whole controversy. The Institute for Energy Economics and Financial Analysis (IEEFA), a Cleveland, Ohio, US-based independent research group, has said that the Posco deal is likely to “send shiver down the spine of global coal investors.”
IEEFA says, “Adani suggests a key aspect of this agreement is that Posco will provide some equity financing for the rail project, and that Posco’s involvement should open up debt project financing from Korean banks.” Tim Buckley, IEEFA’s Director of Energy Finance Studies, Australasia, said, “This project requires a thermal coal price well in excess of US$100/t to be commercially viable – it is currently sitting at US$60/t to US$70/t.”
While Adani has been accused by environmentalists in India and Australia for "overlooking" the damage to ecological concerns at Adani Port and SEZ in Gujarat and the coalmining project in Australia, Posco is under fire in Odisha for its alleged move to "displace" thousands of tribals from their land while implementing its port-to-steel project. While the Adanis were recently given clearance by the Supreme Court for its port and SEZ project, Greenpeace continues with its campaign against the Australian project even now.
Buckley said, “Adding 60Mtpa of additional supply will have a materially adverse impact on the global seaborne price of thermal coal. 60Mtpa equates to a 6% expansion of global supply, at a time when most coal mining companies are evaluating mine closures. Opening up the Carmichael project will help facilitate upwards of 200Mtpa of additional thermal coal supply. Combined, a 30% expansion of global supply over the medium term will see the global thermal coal remain under pressure, and could in isolation drive the long term coal price permanently down 20% from current commodity analysts’ projections.”